BRAZIL: Trade light as buyers wait for more stability
Published: 03/18/2010, 8:07:51 AM
Brazil's sugar trade remained light this week as most traders are reluctant to take positions--in any direction--after recent sharp declines unsettled the market, according to Dow Jones.
With little confidence in price direction, nobody is willing to make big moves when prices could rise or fall, said Deni Gueiros, a sugar broker at Uniao Corretora in Sao Paulo. Gueiros added that trade was light on Wednesday at current sugar price levels.
May sugar has plummeted since Feb. 1, when the market reached 29-year highs. Prices soared on estimates for tighter production in top producers Brazil and India as a result of mainly unfavorable weather conditions. But industrial sugar buyers were reluctant or unwilling to buy sugar at such high levels.
A trading house on Wednesday with sugar to sell was willing to sell very high polarization raw sugar at 50 points over ICE May sugar.
Rival trading houses wanted prices that ranged from flat to discounts against the same contract, Gueiros said.
Bruno Lima, a risk analyst at FCStone in Campinas, said sugar buying could pick up with prices at around 18 cents per pound.
Lima said that mills in the main center-south sugarcane region, which accounts for 90% of the country's cane, can break-even at 17-18 cents per pound.
"This could be a good floor for sugar prices and if the price appears to stabilize buyers may decide to step up their purchases," he said.
A trader at a US sugar exporter agreed that mills can make a profit by selling their sugar at 18 cents from the new crop. The new 2010/11 crop will see harvesting gather pace in April and May onwards.
Trading houses with sugar from the old 2009/10 crop are also reportedly starting to see interest again from countries such as India and Indonesia, he said.